Leave is paid leisure time. Workers are entitled to leave allowance for the time of their vacation. The leave allowance amounts to 14.25% of the respective gross wage. It is comprised of 11.4% of the gross wage payable for leave days in lieu of wages plus an additional 25% of the leave allowance.
Workers’ entitlement to leave allowance is based on the gross wages earned in Germany.
The term ‘gross wage’ means the remuneration that a worker is owed by his employer for his services or the work performed. Generally, it is based on the employment contract in conjunction with the statutory or collectively agreed terms prevailing in the state which a worker is posted from.
For work performed in Germany, it is not permitted to undercut the statutory minimum wages applicable in Germany. If the statutory minimum wage is higher in the country which a worker is posted from than in Germany, then the higher amount must be paid.
Any leave allowance already paid is deemed to be gross wages. This does not include the collectively agreed payment of a 13th monthly income or any company payment of a similar nature (Christmas bonus, annual one-off payments), pay in lieu of leave as well as gratuities payable when employment is terminated.
Formula for leave allowance:
14.25% of gross wage = leave allowance
In 2018 a worker has already earned EUR 9,000.00 in gross wages in Germany. 14.25% of EUR 9,000.00 in gross wages equals a leave allowance of EUR 1.282.50 payable in addition to the worker’s gross wages. The leave allowance is to be paid in proportion to the vacation days granted.
If a worker takes only a part of the accumulated leave (partial leave) that he is entitled to, then the employer has to pay an equivalent daily rate to compensate him for each vacation day.
Formula for partial leave:
leave entitlements in EUR divided by (/) leave days = daily rate
daily rate x leave days granted = leave allowance
A worker has accumulated eight leave days and leave entitlements totalling EUR 1,200.00 for the calendar year 2017. The worker would now like to take two vacation days. How much is the leave allowance for such partial leave?
(EUR 1,200.00)/8 = EUR 150.00
EUR 150.00 x 2 = EUR 300.00
The employer has to pay the worker a leave allowance of EUR 300.00 for two vacation days.
A worker can take his leave in full or partially. A daily rate of the allowance payable has to be determined first.
Formula for multiple partial leave
(remaining leave entitlements in EUR) divided by (/) (remaining leave days) = daily rate
daily rate x granted leave days = leave allowance
The worker has already taken two days of leave and has been paid an allowance of EUR 300.00 in 2018. He has meanwhile worked on construction sites in Germany on 130 working days and has earned a total of EUR 11,425.00 in gross wages in that calendar year, including leave allowance. He would now like to take another six vacation days. How much leave allowance is to be paid by the employer to the worker for those six leave days?
a) First, the total amount of accumulated leave allowance has to be recalculated on the basis of the gross wages reported in that calendar year.
14.25 % of EUR 11,425.00 = EUR 1,628.06
The worker has earned a total amount of EUR 1,628.06 in leave allowance for that calendar year.
He has already received EUR 300.00 in leave allowance.
EUR 1,628.06 - EUR 300.00 = EUR 1,328.06
The worker’s remaining leave allowance for that year is EUR 1,328.06.
b) Accumulated leave days have to be recalculated for that year as well.
130 / 12 = 10,83 rounded down to 10
In that year the worker has been entitled to 10 leave days in total.
Those 10 days have to be reduced by the two days already used up
10 - 2 = 8
The worker still has eight leave days remaining in 2018.
c) As the worker has not used up all of his remaining vacation days, this is considered to be partial leave again, so that the leave allowance has to be calculated anew on the basis of a daily rate. The new daily rate has to be multiplied by the number of leave days granted.
EUR 1,328.06 / 8 = EUR 166.01
EUR 166.01 x 6 = EUR 996.06
For the newly granted six vacation days in 2018, the worker will receive a leave allowance of EUR 996.06 from his employer.
If a worker also works on construction sites in Germany in the following year, he will acquire new leave entitlements. When the employer grants leave to this worker in the new calendar year, it has to be determined whether there are any entitlements left, and if so, how much remaining leave has to be carried over from the previous year to the new year. To ensure that no leave from the previous year is forfeited, any leave entitlements from the previous year have to be granted first before any leave entitlement for the current calendar year is taken.
A worker has carried over eight leave days remaining in 2016 to 2017. In addition, he is still entitled to a leave allowance of EUR 1,200.00 for 2016. In 2017, he would like to take another six days of leave.
How much is his entitlement for leave allowance from the remaining leave? As the worker is only making partial use of his remaining leave, the daily leave allowance he is entitled to has to be recalculated.
EUR 1,200.00 / 8 = EUR 150.00
EUR 150.00 x 6 = EUR 900.00
The worker has to be paid an allowance of EUR 900.00 for six vacation days.
Payments of leave allowances as well as of the other income (wages) are made by the employer for each payroll month by the 15th of the following month at the latest. By submitting their monthly report electronically to SOKA-BAU, employers claim the leave allowance paid to workers and are reimbursed for the entire leave entitlements paid. The same applies to outstanding amounts, which the worker has acquired whilst being posted to another employer.
In order for a worker to be able to claim his leave entitlements from a new employer, the previous employer has to notify SOKA-BAU that the work relationship was terminated. In this case, the worker will receive an up-to-date overview from SOKA-BAU stating the leave entitlement (worker’s account statement) he accumulated until the time he changed employers. The overview is deemed to be a vacation statement.
If an employer recruits workers who previously worked for another employer in the construction industry, he will need a copy of the worker’s current account statement to be obtained from SOKA-BAU in order to be able to calculate the worker’s leave entitlement. This is necessary to determine whether the worker still has any leave entitlements from previous work relationships, and if so, to what extent.